There is a burning clarity that is slicing through the world, it is the clarity of watching the carefully layered and baroque politics and rationales of an age liquefy into mass of molten crisis. We are seeing the full metal meltdown of the ideology of a neo-conservative, and neo-liberal, age. However, before predicting a change away from the effects and intent of that era, we should realize that what is happening now is akin to a financial 9/11. It is a shock, but the response will be to support the elites, grab power, and then find a way to sell the pain the public. The last, and most important, neo- is still in place. We live in a neo-classical age, where elites rule by something analogous to divine right, and the problem of the day is how to make the poor pay.

The response has been to turn to that heroin of high finance, paper money, and to seek some means of merely delaying the reckoning, and suspending those rules which are put in place to avoid crisis, or prevent crisis from turning into catastrophe. Clearly crisis is here, and the vision from inside the village of Davos, which we can call the Davos Consensus, is that the inflation of the financial sector and the pyramid of power built on top of it, must continue at all costs.

This is happening even as the toxic ooze of their financial instruments is choking the credit system, and the radioactive slag threatens to consume the future. The simple truth is, there is not enough money on the planet to pay the promises they made to themselves.

I will be on in a bit after 5 pm Eastern with CS Kendrick and Jay Ackroyd in our test of the new Outlook program broadcast from Second Life.

Synopsis of the Argument

American politics realigned in the election of 1968. This era of Nixon centered around four polar politics: a left, a right, and two middle movements, one of which, the more active, was an ideological moderate movement which was aligned to the right. The natural progression was the preservation of the liberal state by conservative means. On a Presidential level, this meant alternating between radical Republicans, and conservative Democrats, while keeping a largely spendthrift Congress in place. Over the period the Krugman effect led to economic centralization, and then to social and political homogenization. The era of Republican Presidential landslides ended, both as the uncommitted center became less motivated by appeals to single issues, and geographies realized they had more economic facts in common.

This four pole politics has been breaking down, and the nomination of Palin as VP is a precipitating event. The center-right's cohabitation with the far right has become increasingly intolerable. Into this is projected a digital effect. Transportation costs going down centralize, but communication costs going down decentralize. The decentralization of communication meant that even people in political minorities locally could demand, and assert political visibility. This is the basis of Dean's "50 State Strategy."

Obama harnessed this to win the Democratic nomination. Left to itself, this would be leading to another round of a Conservative Democratic period as President, cleaning up the mess in time for the next reactionary to spend the money. That is the right ratchet of the center-right/right cohabitation. The center-right thought it wanted a more conservative country.

In the second part, the economic reality of the Bush Bomb exploding will be added to this, pointing to the end of this cycle.

McCain, shot down again

The most political casualty of this meltdown is John McCain. To understand how long the odds he faces are, consider the following, in order to win, in slightly less than two weeks, he must pry back every single toss up state, and win back one where he is clearly behind. It would require closing a gap of 7% in the battleground states, getting Florida, Ohio, Nevada, Colorado, North Carolina and Missouri. He would have to hold Indiana, Georgia, North Dakota, South Dakota, Montana and West Virginia. Indiana seems like it is slipping from his grasp, and the northern plains are turning into toss ups that will depend on having a better ground game. The 50 state strategy as an idea is paying dividends, because with a massive advantage in money, and the ability to keep up the burn rate through the election, it is Obama that is forcing McCain to make hard choices about what to do.

That this is happening is not surprising. The brief McCain bounce in September, caused by the Democratic Party, and Barack Obama, misplaying the convention period dramatically, has turned sour. But McCain was always the under-dog on the fundamentals. He is trying to follow the President who has squandered more political capital than any in history. For every person who approves of Bush's job now, there are three who used to, and don't.

The dynamic at work in the elite rejection of McCain is crucial. Republican hacks might wax nostalgic about how Nixon defeated elite opinion, they forget that elite opinion was right. In less than two years, Nixon was gone, shamed by scandal, and presiding over an economic meltdown.

Four Polar Politics in America

The reason is that the dominant political dynamic in America since 1968 has been how a center-center/right body of opinion which thinks of itself as "moderate" and "centrists" behaves. It's natural political alliance is with the hard right, in that this movement believes, as the hard right believes, that people are essentially evil, and must be whipped, beaten, and threatened to do any useful work. They are heavier on the carrots than their hard right brethren, but they are fundamentally a movement of the right in their view of human nature. The irony, or contradiction, is that both the hard right and the center-right movement are utterly dependent on the liberal state. The goal of the last 40 years in American politcs, an era now longer than the era it replaced, has been to have liberalism, without liberals.

There is also within this movement are deep divides: between the elite and populist wings, between geographic centers, and between ideological moderates and uncommitted. These two groups are involved in competition: one provides the labor in a series of protected industries, the other provides the management and professional skills. The populist center-right builds the houses, that the elite center-right finances with mortgage backed securities.

To understand this it is useful to look at numbers. If the American public is surveyed as to ideological alignment as to Conservative, Moderate, or Liberal, then the Conservative identification has bounced between 25% and 35%, and the liberal between roughly 15% and 25%. The Harris poll is one example among many. Even as Democrats were taking both houses, the poll found that there were almost twice as many self-identifying conservatives and liberals. This poll, however, is not to be really trusted, because it is contradicted by ideological constraint patterns. That is, people vote with their ideology. If Americans really were 37% to 20% ideological on the ground, and really did vote at about 85% with their ideology as Abramowitz' paper suggests, then the Republicans should have obliterated the Democrats, especially with their district advantage.

Instead when the option of don't know/don't think about it is included, the numbers snap into much better focus. The size of the liberal bloc remains almost the same, or increases the size of the conservative bloc drops slightly, and the moderate bloc splits into two groups. Moderate, and I don't Know. The moderate voting bloc, as a percentage of the population is roughly equal to the liberal identification. Raw numbers are at the ANES Guide

What is even more important is that when the survey is divided into voters and non-voters, the uncommitted are disproportionately not voters. The size of both liberal and conservative wings grows. In a base election, the ideological moderates, far from being the largest voting bloc, are often the smallest. They have a disproportionate influence, because neither wing is able to win a majority alone, and the swing districts feature moderate voters, but they are, in an off year Congressional election, surrounded.

However, in a Presidential election, the ideological moderates have a strategic advantage, and that is that in turning out unmotivated base voters, there is the need to both be clearer about ideological identification, to capture those who are the least committed base voters, and to make more promises, to capture both those who are disaffected because they want more than is being offered, and those who have not seen a promise that motivates them.

That the moderates lean right can be seen from comparing slightly liberal to slightly conservative: the slight conservatives have enjoyed a persistent advantage.

This means that there are a few configurations at the Presidential level.

• The center-right allies with the hard right. Result: right wing landslide in 1972, 1980, 1984, 1988. But it has now been 20 years since this alignment took place. It has been as long since the last right/center right coalition, as it has since Nixon eeked out a victory in 1968.

• A division of the center-right aligns with the center-left. This produces a very close election. 1976, 2000, 2004 were elections dominated by the defection of a slice of the center-right to the Democratic Party. Since the wings of the center-right are based on their coöptition, how they are dividing a limited pie of protected income streams from protectionist activity, they will be of roughly equal size. These domestic spats between the wings of the center-right will be very close, because it is a matter of pushing people to their extremes.

• The center-right overtly splits, and one wing aligns with a major party. This produces an "optical land slide," an election which has a high electoral vote for the winner, even though he wins a plurality of the vote. 1968, 1992 and 1996 were such years. The key question is which party the rump of the center right aligns with.

The four polar politics in America then produces what might be called "The Vocal Silent Majority," the right leaning ideological moderates, who must motivate their shadow uncommitted to form a governing majority. They are thus both paranoid, because without this connection they are squeezed between two voting blocs that are more active, and with it they are clearly the largest bloc.

It is this group that feels betrayed by Bush: the center-right ideological moderate. They expected him to "govern from the center." Which meant pursue some hard right policies, but within boundaries acceptable to the center-right. Bush, however, is the product of the irresponsibility of elites, and governed by the fratsor principle: that once in the circles of power, that there is no need for personal restraint or restraint in pursuit of personal power. The center right kept supporting Bush, fearing the center-left even more, but this only accelerated the decline under a government that was packed with cronies and ideological hacks. The Federal Government became FEBAR - Fema'd up Beyond All Recognition.

This began the process of de-aligning the center from it's rightward orientation.

The Krugman Effect

When looking at economics and elections, the general mistake is to ascribe too much importance to short term economic aggregates, and not enough to long term economic patterns. People cannot easily shift their careers and personal capital, so short term economic discomfort must overcome their basic economic way of life. Duch and Stevenson in The Economic Vote, How Political and Economic Institutions Condition Election Results examines how little correlation there can be in particular nations to economic aggregates. Rationally people are more willing to vote for a President that is good for their region or industry, than to worry about the short term macro-economic effects. In general, this is sensible because Presidents have more control over who gets the prosperity or adversity, and less on the total economy. However, macroëconomic conditions have statistically visible effects in American politics even back into the 19th century, as G. Patrick Lynch has argued.

Paul Krugman's work on international trade is only gradually that the importance of that work in a wider range of contexts is becoming visible. The key to his Nobel winning work is that consumer choice is a good in itself that people pursue, and that transportation costs and economies of scale are a spectrum. As transportation costs lower, then economies of scale, that is capital rents, dominate a market. Rising costs lead to decentralization and deglobalization.

This is true not only in international economies, but large national ones such as the United States.

Spatial bridging costs have fallen and that means that more and more the economy of an area will focus on those aspects of tradable goods and services where it has an absolute or comparative advantage. In politics in America this Krugman thesis, that falling transportation costs lead both to more trade between areas that are similar as part of consumer choice, and more concentration on fewer industries, has lead to what Bill Bishop calls The Big Sort. A clustering of "like minded" Americans. But this follows from a clustering of productive factors, and in turn drives it. More people of the same mindset drives more effort into production of a particular kind, which attracts more like minded people.

The book however, argues that economic factors are not the driving reason, but fails to understand that it is now about income level or material consumption, but about production of economic rents. Like minded people means that it is easier to develop personal relationships. Personal relationships are driving factors in success. More than have of all job placements are found through "networking." The collection of social rent, that is knowing someone before someone else, is an economic factor, even though it plays out in social terms.

The proof of this is in a prediction of the book that is failing to come to pass, namely the prediction that people will move to Virginia to commute to Washington DC because they want to be with "like minded people." Virginia is becoming Democratic, and the prediction fails to take into account a key difference between Maryland's slice of the Federal Government, and Virginia's. It is a great deal easier to get to the Pentagon, and to the entrepreneurial networking companies that cluster along the track to Herndon Virginia. The choice between Maryland and Virginia is not a coin toss, and this is a differentiator. People who work in Gaithersburg Maryland in the defense industry there are no more inclined to be liberal than the people who work in Arlington Virginia's defense industries, but there are many more of the latter than the former, and the former deal less directly with military officers, who are far more conservative than the US as a whole. While Virginia being Confederate territory may be a factor, that it is Pentagon Territory is more so.

The Big Sort, then, is the Krugman effect writ in politics. It is a social economic effect of an economic driver. And it is this sorting effect which drives the concentration of conservatism and Republicanism in the American South. It is also the linkage between Republican support and the sprawl economy, as this paper by Thad Williamson points out.

The consequences for the moderate movement are rather clear. There are two primary wings of the moderate movement. Those who are mobile by choice, and those that are no mobile, or mobile out of work hot spots in unskilled, or still undifferentiated labor. One city can come to dominate missile guidance systems, but they need plumbers every place, even if one real estate market is much hotter than others.

Thus the divisions of the moderate movement have been centered around the relative mobility of social rents. The Dixiecratic split in 1968, was based on the immobility of the Southern social system. However the Perotistas were spread over the entire country. Even though the statistical evidence for falling wages among the unskilled and semi-skilled is scant, Perotistas were most vocally anti-NAFTA, this is because it reduced their own choices in employment. A city that is Krugmanizing means that more people will be more dependent on fewer employers and lines of work.

The Krugman effect, combined with the larger size of the hard right versus the center-left in the United States, is the driving factor in creating a base for first the Republican Party as the natural Presidential Party, and then a counter movement where the metropolitan centers have become a haven of a center-right/center-left coalition.

The key to this is that during the ideological peak of the age of Nixon, not only was the conservative movement larger, but the moderates were, in effect, soft conservatives. On issues of the time, both economic and social, moderates polled as soft conservatives, even as their uncommitted counterparts polled to their left on economic issues. This is why for much of the Nixonian period, when the ideological moderates needed to bring out votes, they played to social, not economic, appeals. Capital punishment, gun laws, abortion, and equal marriage being just four examples.

However, beginning in 2004, and increasingly after that, the uncommitted polled increasingly to the left, the electorate became more ideological, and there was a continual erosion of support for both the moderist Congress, and the rightist President. But the break was not complete. When asked about how to do things, moderates still polled as Reaganites: tax cuts, military spending, national security state, indeed a litany of means, the moderates looked like Republicans. However, when asked what they wanted as ends, jobs, wages, national health care, exit from Iraq, they polled more and more like Democrats. Part of this was dislike of Bush, who dropped in approval to the mid 30's over the course of 2005 and 2006.

However, it was equally an incoherent, but very real, rejection of ideological moderatism. Even as the Democratic Party's Congressional leadership took an openly ideologically moderate stance and cut a series of very generous deals with an unpopular President, their own popularity sank. The public hates the Democratic Congress, except that it hates George W.Bush even more, and does not want a return to the Republican Congress.

Four polar politics is breaking down the, because it's original assumption, that the natural governing situation was a Democratic Congress to protect the liberal state, and a Republican President to contain that liberal state on social issues, and rob that liberal state on economic issues, has broken down. Both Reagan and the second Bush robbed the liberal state consistently. But "there is a great deal of ruin in a nation" – that is, it takes a long time of bad policies to eventually bankrupt the credit of a great nation, and to convince others that they are better off without that nation. The US is right now playing the "too big to fail" card on the rest of the world, but that only works for a short period of time.

This shift can also be seen in numbers. On issue after issue, the public has shifted to wanting liberal government. The bail out is a signal to them that what they thought was true, that we could not afford a restructuring of government on the large scale, was not true. Our options were not as constrained as people thought. As the stake holders in the old system die, and the population is increasingly composed of people who are being expected to pay rents to the past for benefits they do not receive, the pressure to simple reset the economic clock is growing.

The Desperate White House Wife

The major reason for the change in this race is that recent events have destroyed the linkages between the center=right ideological moderates, and the hard right. The second part of this essay will look at the financial-economic ideology, however, the social effect is as important. That social effect is the revulsion of the ideological moderates at the use of unadorned racism and corruption by the hard right.

Palin makes an excellent fulcrum for analysis because she was McCain's most successful play. She erased talk of Obama's speech, created an air of expectation and anticipation, solidified his standing with resource state conservatives and fundamentalists, affirmed his role as lead with resource extraction interests. However, these positives were erased, because while she could be made to look and dress like a conservative middle class real estate agent, straight out of Desperate House Wives she could not be made to talk like one. The crucial downward spiral began with the Couric interviews, where she simply did not parse as a self-made woman who rose because of her Marth Stewart like self-possession and drive. Instead, she came across as, at best, vaporous, and, at worst, alien.

What makes Palin like fingers across a blackboard is the hard right and the center-right have a symbiotic relationship in economics and politics. The hard right constitutes about 1/3 of the population, and is not going to go down in size any time soon. In many of the markets that the center right participates in, such as home building, selling vehicles, and financing of these, they are closer to half or more of the market. The center right must advertise too, pander to, and in generally coddle the delusions of the hard right on matters such as religion and race. They fund much of the worst of the right wing media, since this is how these people are sold to.

Thus they cannot long have their hands clean of overt racism. But they are not, in themselves, bigots. They just know that funding bigotry is good for their business, regardless of what its structural effects are. They can't get out of the bigotry business, because they can't give up the business. But they are also aware that they can no longer afford to live in a country which combines right wing socialism with Dixiecrat racism.

Palin is the cognitive dissonance at the root of this. She has all of the visual heuristics of being a center-right system joiner, play in the sand box boomerist suburbanite. She looks like a suburban real estate agent, at least, one as played in a Hollywood movie or New York Television show. However, she cannot speak like one. This is not merely her religiously strange beliefs. These are prevalent in suburbia, and people learn not to press on them. It is her overt corruption, her overt resume padding, her overt clumsiness of expression. The center right joins, she pretends to have. The constant drip drip drip of evidence that this is so is more damaging than any single utterance.

She is, in a phrase, a female George W. Bush, only without the family to hide her mistakes.

That she gathers to her rallies and her person people who are beyond the range of acceptable is also obvious, she evokes the fear of late night torch lit rallies, and the ugly demons that the center-right must hide.

It is not then that Palin is unlike the center-right, but that she is a distorted mirror, a mocking parody of the things that are core to their self-image. Palin exposes the lies that the suburban center-right tells itself, and shoves the image in their faces. Palin is an affront to every center-right individual, and especially to every yuppie woman, in that she has risen solely because of her ability to present, and drags with her into their living rooms and public space everything that they would prefer to forget.

The entire lawless fratsor culture around the hard right, which Palin attracts to her like a goddess presiding over a festival then, is the irritant. Her parody of what they ascribe their own success to is the irritant. The corruption which they allow in petty form, but which she has made a governing policy of her time in power, is the irritant. She is their flaws and foibles magnified to bloated size. And they hate her for it, as they hate those things in themselves, and are consumed by shame.

This is why the Vice-Presidential pick, normally a political afterthought for the scribbling classes, has become so important. So many on the pseudo-intellectual right loathe Palin because it is not yet safe to admit that the difference between her corrupt self-centered media-whoring and John McCain's, is the particular stick they road as a ticket to success. Center rightists, particular those whose role is to launder right wing elitism into the populist center-right, such as David Brooks, loathe her, because she both exposes their own complicity in incompetent, corrupt, nepotistic, unstable, and irresponsible elitism, and thrusts it forward in a form they cannot deny as they embrace. There is no way to spin Palin as other than what she is. Unlike George W. Bush, who for a time could pass as every man, and as a figure of business and the elite, Palin cannot pass. And many of the people on the hard right have a justifiable fear of not being able to pass, because they are constantly trying to pass themselves off for what they are not: reasonable, flexible, intellectual, and fact driven. Among, we might note, other things.

Palin represents a threat to the right wing scribbling classes, precisely because she represents the liberation of hate from their disguising it and couching it in pseudo-factual terms. The ability of micro-media to create independent media universes, and the break down of the single unitary mainstream America, an effect the center-right used to gain an edge in their competition with the center left, has now gotten out of their control. Fox News, doesn't need David Brooks, any more.

The realignment of a new pole

Thus the larger economic and political shift, from a moderate movement which is split into ideological moderates from uncommitted, which aligns itself alternately with its natural partner to the right, and its partner of convenience to the center-left, was collapsing even before the financial crisis. Bush's slow, but almost relentless, fall in popularity and approval began long before he housing bubble burst, and long before the credit crunch took on epic proportions. The economic back drop, of increasing regional specialization of the drift of the center to desiring more liberal government, and not merely a continuation of the current liberal government, the long term wage crunch, the general stagnation of the quality of consumer goods, and of labor opportunities, the rising rents of the strategic requirements of the middle class: housing, education, and high quality medical care – these all create a long range pressure.

It is also useful to note that the long term demographic pressures written about by Texiera and being made into a political instrument by people like Simon Rosenberg are part of the gradual pressure shift. As people consume news differently, as they relate to others differently, their means of connection change. As people live in more and more homogeneous political and economic environments, the people who are not part of the dominant political and social ethos of their economic area, reach out through other means. The Krugman Effect is countered, where decreasing transportation costs lead to economic centralization, is countered by the Network Effect – that radically decreasing communications costs make it possible for very decentralized, at least physically, social networks. The more the first is in play, the more the second becomes a counter-thesis.

One reason for Barack Obama's victory in the primaries is that the network effect creates a particular backlash effect. As people become more politically and socially isolated in their region, and then connect to other like minded people, they begin to demand the ability to be visible and socially acceptable. The partisan homogenization of American politics that followed economic homogenization spawned a movement, both in the left and the right, to have visibility even when outnumbered and surrounded. This need for social affirmation is a human need. Obama successfully gathered to him people who were in the political minority where they live, but are part of a broader shift across the country. In most states where there is a Democratic majority, Obama lost the primary, but in states where the dominant local culture is conservative, Obama largely won. There are exceptions in both directions, but the lopsided victory in caucus and primary states where there is a Democratic minority, was Obama's base, just as Hilary's base was in the industrial Democratic majority areas.

Bush road to power the collapsing of America into politically homogeneous areas based on transportation, an analog effect. Obama road to power the digital counter-effect, of the realization of individuals, even those that are physically isolated, that they are part of a larger political and economic geography. The creation of a non-conservative core of the Democratic Party, as explained by Tom Schaller, is mixed with a political reality within the South itself: namely that it is dependent on economic production in the rest of the US, and as that production collapses, so does it's own stream of subsidies. 2006 accomplished much of the solidification of the states of the old "Union" into the Democratic Party. This has meant that where Kerry had to play defense in New Jersey, Pennsylvania, Wisconsin, Michigan and Minnesota, Obama has not, and has built a beach head in Iowa that is almost insurmountable. The swapping of the old Republican and Democratic coalitions is almost complete. It is like that that there will be, at the conclusion of this election, only 8 Republicans, counting Lieberman as a Republican, from the Senate in the old North: Collins, Snow, Roberts, Brownback, Lieberman, Grassley, Spectre, and Voinavich. Four of these are from two states: Maine and Kansas, and Spectre is probably going to be followed by a Democrat in office.

This effect is producing a new pole in American politics. This new pole is an anti-right pole, that is about to win it's second consecutive national election, following the elections of 2006. 2006 was the 1960 of this new political era, two sides, roughly equally matched, were separated by the new media. The Democratic majority in the Senate, to no small extent, was based on a cheap taping and expansion of a "Maccaca" moment. A few thousand votes separated races. Several of the new figures that rose, including Sen Tester of Montana and Sen Webb of Virginia, are not liberals or progressives, but they are against the way the hard right has created a poisoned and localized politics.

Within this movement there are deep, and perhaps fatal, divisions. Many members of this movement are still right looking for answers and direction. They still capitulate to the right on issues such as offshore drilling, domestic spying, warrant less searches, torture, neo-colonialism, and military socialism as a fundamental economic policy.

However, this introduces the second part of the full metal meltdown – the explosion of the Bush Bomb.